Innovation, organization and Entrepreneurship
Course goals:
Explain the different types of innovations (e.g., product, process, incremental, and radical) and
the antecedents and consequences of each type of innovation;
Define the foundational theories used to understand organizational innovation (Evolutionary
Theory, Knowledge-Based View, and Learning Theory);
Explain the dynamics of intra- and inter-organizational knowledge creation through personnel
mobility;
Understand and explain open innovation and, specifically, the role of interorganizational and
intraorganizational collaboration on innovation;
Critically understand and analyze scientific papers, emphasizing research design and causal
inference
LECTURE 2 – THE INNOVATION ENVIRONMENT (MARCO LEVEL)
What leads firms to survive? The ability to innovate
TYPES OF INNOVATION
Innovation is something what you do when it is new, for example it is an innovations when it is new
to the firm and not new to the world
Different innovations:
Incremental and Radical
Incremental innovations Radical innovations
Evolutionary; Incremental Revolutionary: “jumps”
“Leitmotiv”: we can always improve (more of Leitmotiv: crisis – we have to change (first
the same; 1st order solutions) change, then improve, 2nd order)
Focus: management of operations (efficiency) Focus: management of opportunities (resource
leverage; NBD/NPD)
Dominant role of planning & control Focus on creativity & entrepreneurship
e.g.: Total Quality Management (TQM), Six e.g.: Internet, cars, Airplanes, AI
Sigma
Consequences of the types:
Incremental innovations Radical innovations
Source of short-term financial revenue Source of long-term financial costs
No guarantee for long-term survival Necessary for long-term survival
,For example: When Apple is launching a new phone it is now a guarantee for long-term survival, it is
a way to sell a few new phones. Apple needs to think about radical innovations to make aa plan for
long-term survival. But if you do not have the incremental innovation available then you do not have
the resources to the radical innovations.
INNOVATION ENVIRONMENT
An evoluti onary patt ern of innovati on (Abernathy and Utt erback, 1978)
Product life cycle
Above is decelerating, its slowing down, and below the line is acceleration.
Above the line: the more I am invest in time or
engineering effort that did not refund. The more
you invest it is not going return the same amount of
performance then it did before the equal point.
The most of product innovation happens at the
beginning of the product life cycle
For example: Smartphone in the early 2000s had
visual keyboards (e.g. Blackberry) and in 2007 Apple
launched and created the iPhone. What happened in
the product innovation? It slowed down. After that
the design mostly stayed the same, only the
technology changed.
Why is product innovation slowly decreases.
Product somehow takes a shape of form that
everyone accept, the product shape becomes
dominant. But process innovation takes
places. There is room for improvement.
The beginning of the S curve is the beginning
of Radical innovation and de incremental
comes after that.
Three phases of innovation
Fluid phase: product innovation. The outcome of this
phase is the dominant design is established, from
here the dominant design is something on his own.
Transitional phase: testing and trying and if it works
then optimizing.
Specific phase: Reduce costs and as the aim optimize
the process.
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, Fluid phase Transitional phase Specific phase
Innovation emphasis: Functional product Product optimalization Process optimalization
performance & variation (cost reduction)
Stimulated by: Technological Users and Cost pressure and
possibilities technological improving quality
possibilities
Type of innovation: Frequent product Large process changes Incremental process
changes changes
Process General, flexible but More specialized, less Highly efficient, but
inefficient flexible but more inflexible
efficient
Size of organization: Small-scale Medium-scale Large-scale
Organizational Informal, Project teams Formal, rules,
control: entrepreneurial structures
What are the organizational implications? Fluid phase
Strong emphasis on:
o Frequent redefinition of tasks
o Limited hierarchy
o High lateral communication
Organic structure adaptability (high environmental uncertainly)
What are the organizational implications? Specific phase
Strong emphasis on:
o Stable tasks
o More hierarchy: coordination and control
o Top-down communication
Mechanistic structure predictability (low environmental uncertainly)
What are the organizational implications? from fluid to specific
Structure: from informal to formal
Organizational behavior: form flexible to rigid and predictable
Power: from entrepreneurs to managers
Orientation: from external to internal
Technological disconti nuiti es (Tushman and Anderson, 1986)
What does technology to the product innovations?
1st generation technology has his own S curve.
For example cellphones in the 90s/early 20s you can call.
After you got a 2nd Technology, this has his own S curve.
Example after cellphones you got smartphones etc.
Technological discontinuities → Technologies change
over time in a more evolutionary way. Sometimes
technologies there is a mass discontinuity, this is called
competence destroying.
Technology discontinuities are basic Radical innovations
who are much better. For example The DVD / Netflix
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, Is an innovation Enhancing or destroying?
It depends if the market of the first innovation is
destroyed because of the 2nd technology
discontinuities.
Competence enhancing Competence destroying
Large improvement in price/performance Large improvements in price/performance
Build on existing knowledge Existing knowledge becomes obsolete
New product or new processes Entirely different knowledge and competencies
“Rich get richer”: established players “Richer get poor(er)”: new entrants benefit
benefit
LECTURE 3 – ORGANIZING FOR RADICAL INNOVATION (FIRM LEVEL)
Recombinant Innovati on (Hargadon, 2003)
Technology: “the arrangement of people, ideas, and objects for the accomplishment of a
particular goal”
Existing technologies are combinations of three elements: people, ideas and objects.
Innovations are created through a process of recombination.
Mass production as a recombination of (Example Ford Motor Company):
Interchangeable parts: The use of single purpose machines for the purpose of creating
interchangeable parts reduced variability in parts and reduced the need for skilled craftsmen.
Continuous-flow production: reduced amount of inventory at different stations and created a
continuous flow of inputs & outputs using conveyor belts among other things.
Assembly line production: reduced variability in workers using simple tasks and hand-offs to
next worker.
Conclusion:
Recombining existing components creates a whole greater than the sum of its parts, because
people, ideas, and objects are pulled together from different domains.”
NOT thinking outside the box BUT, thinking in multiple different boxes.
Origins of Radical Inventi ons (Schoenmakers and Duysters, 2010)
The difference between inventions and innovations:
An invention is something new it’s a new technology.
An innovation is an commercialized invention.
The difference between entrepreneurship and corporate venturing:
Entrepreneur is an individual or a group individuals starting a firm
Corporate venturing is mature + entrepreneurship alliance (involves larger companies investing
in and supporting entrepreneurs)
What are the origins of radical inventions?
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